Students told to think about what they get back from their uni fee investment

Thursday, 28 July 2016

Graduates should earn more and find it easier to get jobs over their working lives.

If you or your child is about to head off to university, you are probably all too familiar with how much it costs.

There's several thousand a year for course costs, books, accommodation, living expenses… it's not unusual to finish a three-year degree course with a loan that runs to $30,000.

What salary might you expect in return for extra qualifications?

But what if you flipped it around and considered the return you get on that investment? Students are being told it's time to think more carefully about what they get back for the dollars they spend - and many may be pleasantly surprised.

Chris Whelan, executive director of Universities New Zealand, said the average income of graduates had dropped 12 per cent since 2001 as the number of people with degrees increased. But there was still more demand for graduates than there was supply.

* University of Auckland students rally against fee rises

* Rising uni fees 'may be fatal for economy'**

'As supply grows employers are able to pay less but there is still a good premium for being educated.'

He said, whatever the degree, having been through university improved people's prospects.

Even performing arts graduates, often seen as one of the least vocational qualifications, only have a 4 per cent unemployment rate, compared to 2 per cent for all graduates but 14 per cent for school leavers. 'There are no particularly bad outcomes,' Whelan said.

But he said that was not true of the lower-level qualifications, which can still be pricey. 'Degree-level qualifications all generally have good employment and earnings outcomes, but some of the level three and level four certificate level qualifications are much more marginal.'

Universities New Zealand data shows that in some categories, someone with a level four qualification can expect to earn less on average than someone who went into the workforce straight from school.

Tony Mortensen, director of international growth strategies at the University of Canterbury, said he spent a lot of time overseas talking to students who wanted to come to New Zealand to study. International students must pay many times the amount that Kiwi students are charged – roughly $150,000 for a bachelor of commerce degree.

But he said they still weighed that up and thought the opportunities and extra pay they would receive over their lifetimes made it worthwhile.

'Domestic students are paying about a quarter of that but they don't factor it in, the less they pay the less they consider the return on investment. For New Zealand students, from a return on investment perspective, it's Lotto. You spend $25,000 and three years of your life when the opportunity cost is virtually nothing and the return on investment is exponential over the course of your working career.'

He said he often heard of young people who were planning to leave secondary school and go straight into the job market because they could earn $25 an hour labouring.

'I get it but in five or ten years once they have got used to that and have hire-purchase agreements and other obligations, have got married, bought a house, there won't be the same chance to go back and get that same level of education. It's a dangerous state to get into. Leaving school or $25 an hour might sound good for the first few years but by year eight, nine and 10 you are significantly behind the eight ball.'

Universities New Zealand data shows that people with a bachelors degree earn about 32 per cent more than those with a level five diploma qualification – or an average $76,000 compared to $58,000 for school-leavers working full time.

Those with science degrees earn about $74,000, ICT, $81,000, engineering $85,000, arts graduates $64,000 and nursing graduates $61,000.

Mortensen said those who did not have a post-secondary qualification were on a 'hiding to nothing'.

Those who had NCEA level two or lower were 45 per cent more likely to be unemployed.

WHAT DIFFERENCE DOES IT MAKE?

Sciences: School leaver $55,000, PhD $95,000

ICT: School leaver $56,000 PhD $102,000

Medicine: School leaver $92,000 PhD $158,000

Business and accounting: School leaver $61,000 PhD $110,000

Economics: School leaver (n/a) PhD $121,000

Dental: School leaver $50,000 PhD $136,000

Engineering: School leaver $63,000 PhD $108,000

Averages: School leaver $56,000 PhD $104,000

TIPS FOR STUDENTS

* Consider what job you'd like to end up in eventually. What course would get you there? Talk to people who are already in the profession.

* Find out how much the course will cost overall.

* Look at your prospects for employment as a result of the qualification - is there anything you can do to improve your employability?

* What might you expect to earn? Are there any additional courses you could add on, perhaps as a one-year diploma after you graduate, to boost your earning power?